Organisational Vision STRATEGIC INTENT We are, and seek to remain, an integrated Total Beverage Business dominating all sectors of the cold beverage market in Zimbabwe. MISSION To grow the value of the business in real terms on a sustainable basis. We will achieve this through offering our customers outstanding service and through rigorous attention to the health of the business at all times. By so “We are, and seek to doing we will seek to enhance the value we create for all our stakeholders. remain, an integrated BUSINESS ETHOS To achieve excellence and to ensure survival, growth and profitability, Total Beverage Delta employees will be guided by the following business ethos: Business dominating • A desire to serve consumers and customers with passion • A culture driven by the desire to improve and to excel in all we do • A bias towards action all sectors of the cold • A belief that the destiny of the Company is in our hands. beverage market in “If it is to be, it is up to us.” Zimbabwe.” 02 Core Values 04 Chairman’s Statement 08 Review of Operations s 17 Report of the Directors 19 Corporate Governance at Delta t 20 Accounting Philosophy 21 Directors’ Responsibility for Financial Reporting n 22 Report of the Independent Auditors e 23 Financial Statements t 53 Safety, Health and Environmental Policy 54 Portfolio of Businesses 56 Directorate and Management n 58 Notice to Members o 59 Shareholders’ Analysis and Calendar C D ELTA CORPORATION L IMITED 1ANNUAL R EPORT 2009 Values Statements Our People are our enduring advantage • The calibre and commitment of our people set us apart • We value and encourage diversity • We select and develop people for the long-term • Performance is what counts • Health and Safety issues receive priority attention Accountability is clear and personal • We favour decentralised management and a practical maximum of local autonomy • Goals and objectives are aligned and clearly articulated • We prize both intellectual rigour and passion for our work • We are honest about performance • We require and enable self-management We work and win in teams • We actively develop and share knowledge within the Group • We consciously balance local and Group interests D ELTA CORPORATION L IMITED 2ANNUAL R EPORT 2009 • We foster trust and integrity in internal relationships • We encourage camaraderie and a sense of fun We understand and respect our customers and consumers • We are endlessly concerned with our customers’ needs and perceptions • We build lasting relationships, based on trust • We aspire to offer the preferred choices of product and service • We innovate and lead in a changing world Our reputation is indivisible • Our reputation relies on the actions and statements of every employee • We build our reputation for the long term • We are fair and ethical in all our dealings • We benefit the local communities in which we operate • We endeavour to conduct our business in an environmentally sustainable manner D ELTA CORPORATION L IMITED 3ANNUAL R EPORT 2009 Chairman’s Statement Zimbabwe Dollar quickly disappeared. Initially prices in foreign currency were inappropriately high and significant inflation was seen in United States Dollar prices; this had, by the end of March 2009 stabilised, prices were coming down and inflation had been tamed. This gave local manufacturers an opportunity to compete with imported products and there has generally been an increase in local production. Dr Robbie M Mupawose FINANCIAL REPORTING AND AUDIT CHAIRMAN OPINION The financial information presented is primarily in INTRODUCTION Zimbabwe Dollars (Z$). Inflation adjusted The first half of the year was dominated by a information, disclosure of which is required by dramatic acceleration of inflation due to supply side International Financial Reporting Standards (IFRS), constraints and increases in money supply. In the has not been produced because national inflation four months from October 2008 to January 2009 the figures were not available. The level of inflation acceleration continued and it became increasingly experienced was so high that accurate measurement difficult to operate in a currency which depreciated of inflation was not possible. Conversion of the rapidly. At the same time the gap between the cash income statement to United States Dollars (US$), and bank values for the Zimbabwe Dollars widened whilst appearing attractive, can be misleading as it to a point where physical cash was worth several suffers from serious distortions relating to multiple hundred million times the value of cash in the bank. exchange rates and wild changes in exchange rates In response to this there was a marked increase in during the course of a single month. Prior year unofficial dollarisation and the informal sector, figures have not been shown as inflation has which largely avoids controls, expanded rendered these too small to reflect a value. considerably. Included in the financial report is a balance sheet in Price controls were With effect from November 2008 licences could be US$. This has been produced using historical cost dropped; trading in foreign purchased which allowed trading within the country accounting concepts taking into account the US$ currencies was permitted in foreign currency. This was highly regulated and values of original entries; accordingly, asset values and licences to do so were subject to an effective 7,5% tax on gross income. have not been based on a valuation by the directors no longer prescribed; the This, together with a requirement for manufacturers or professional valuers. In the opinion of the requirement to surrender to continue to trade in the local currency at directors this balance sheet presents an accurate 7,5% of sales to the controlled prices, made business largely unprofitable picture, based on historical US$ values, of the Reserve Bank was for local manufacturers. financial position of the Group in US$ as at 31 removed; the use of foreign March 2009 and will form an appropriate currency for both personal At the beginning of February 2009, the country accounting base for reporting of results in future and business purposes was underwent a paradigm shift in economic policy. periods. largely decontrolled; trade Price controls were dropped; trading in foreign in agricultural products currencies was permitted and licences to do so were The Z$ financial statements have been presented to was decontrolled. no longer prescribed; the requirement to surrender meet statutory reporting requirements. They reflect 7,5% of sales to the Reserve Bank was removed; the historical Z$ values modified to take to account the use of foreign currency for both personal and restatement of the year end balance sheet to business purposes was largely decontrolled; trade in historical US$; this has resulted in an uplift of agricultural products was decontrolled. The nominal Z$ values which has been disclosed in the D ELTA CORPORATION L IMITED 4ANNUAL R EPORT 200 9 income statement and the statement of movement the year were 30% up on the traditional peak in shareholders’ equity. The uplift in net asset value demand quarter and 82% of those of the previous also gives rise to the substantial deferred tax liability year. As a result sales for the year have been 54% which is disclosed in the balance sheet. of last year. Significantly, March sales of lagers represented the highest monthly sales since April The audit opinion on the financial statements is 2008. This rising trend has continued into April qualified on the basis that they do not present a true when sales, whilst by no means back to the levels of and fair view of the financial status of the Group. a few years ago, were at a level not seen since The Zimbabwe Accounting Practices Board has October and November 2007. Sorghum beer provided guidelines on the wording of the (Chibuku) shows a similar, though slightly better, qualification of the audit opinion as this will affect trend to lagers with sales for the year at 64% to prior the majority of organisations reporting in Zimbabwe. year. Sparkling beverages is lagging, the last quarter The unique circumstances prevailing in the of the year remained quite soft and sales for the year Zimbabwe economy over the last twelve months are 47% of 2008. Sales in April have increased have made it impossible to provide meaningful sharply, but off a very low base. financial reporting in respect of the year and, accordingly, the Directors advise caution on the use Sales of plastic products had a very soft third quarter of the financial statements for decision making and a much improved final quarter to end the year purposes. at 64% to prior year. Malt sales for the year were 37% of the tonnage the year before; this poor VOLUMES AND OPERATIONS REPORT performance was due to the reduced barley crops in This year has been a roller coaster of economic 2007 and 2008 which resulted in reduced exports. policy environments which until the dollarisation in Glass production at 55% of last year was marked by early February 2009, were increasingly hostile to the lengthy maintenance shutdowns to repair damage to formal sector of the economy in which this Group the furnace which resulted in the plant operating at operates. Group companies have adapted as around 25% of capacity despite strong export orders. necessary in order to survive and to preserve assets and skills, but the overall situation has been one of SAFETY, HEALTH, ENVIRONMENTAL low volumes and , at best, breakeven profitability. MANAGEMENT AND COMMUNITY SERVICES Demand for our products has generally remained Safety committees have been in place throughout firm, but this has not translated into sales volumes the Company, and the Group Safety, Health and for a number of reasons: there were periods when Environment manager ensures adherence to all consumers were unable to draw cash for purchases; necessary safety practices.